The FSA has been heavily criticised by its own board’s report into ‘The failure of the Royal Bank of Scotland’ (RBS).

The Report concludes that RBS’s failure amid the systemic crisis ultimately resulted from poor decisions made by the RBS management and Board. But deficiencies in the global capital regime and liquidity regulations made the crisis much more likely. In addition, flaws in the FSA’s supervisory approach provided insufficient challenge to RBS.

The report found concerns and uncertainties about RBS’s underlying asset quality, which in turn was subject to little fundamental analysis by the FSA and both RBS’s strategy and the FSA’s supervisory approach underestimated how bad losses associated with structured credit might be.

FSA chairman, Adair Turner, said: “People want to know why RBS failed and why no-one has been punished. This Report aims to answer those questions. It describes the errors of judgement and execution made by RBS executive management which